Nintendo Co., Ltd: Innovating in a Reactive Market

Prior to the launch of the Wii, Nintendo faced many challenges in the home console market. However, the Wii disrupted the market in 2006, achieving success by employing revolutionary control methods, bolstering revenues, and expanding the company's consumer base. Having lost momentum, the Wii has been superseded by Nintendo's Wii U, which further innovates gaming, but faces future challenges.

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Highlights

The Wii as a product represented a shift for Nintendo, away from the traditional hardcore gamer market, and to a different space where the emphasis was on consumer expansion, rather than specifically targeting the already established hardcore gamer demographic.

Even though the Wii had only been on sale for four months before the end of Nintendo’s FY2007, revenues for the year stood at a 90% higher figure than the preceding
year, while the company’s operating income was 150.2% higher in FY2007 than in FY2006, in turn boosting the company’s operating income ratio.

In recent years, Nintendo has seen its market threatened by the increased prevalence of the use of tablet computers, such as Apple’s iPad, to consume video game content. The Wii U's GamePad serves as both an innovation and reaction to the movement of casual consumers from dedicated gaming devices to tablets and smartphones.

Your key questions answered

- What challenges did Nintendo face in the home console market prior to the release of the Wii?

- How did Nintendo respond to challenges from competitors to take back first place in the home console market with its Wii?

- How has Nintendo employed innovation, and how successful has it been in doing so?

- How has Nintendo adapted its strategy going forward with the Wii U, and what factors influence its potential success?
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- The Wii was a gaming revolution-- The Wii traded incremental updates for innovative rebellion-- The Wii represented a strategic decision not to compete with Sony and Microsoft

- Focused marketing, innovative software, and competitive pricing captured ""non-consumers""-- Focused marketing allowed Nintendo to appeal to the casual market-- Software innovation and a focus on health changed the image of the video game market-- Competitive pricing further broadened the Wii’s commercial appeal

- The legacy of the Wii-- Nintendo has so far conquered the seventh generation home console market-- The Wii represented a geographical diversification for Nintendo-- The release of the Wii bolstered Nintendo’s revenues and profits

2012 ONWARDS: THE WII U

- The Wii experienced shortcomings as well as success-- The Wii has been overpowered by its competition-- The Wii struggled to attract dedicated third party support and mature games-- Unlike its competitors, the Wii has not become a home entertainment hub

- Nintendo is looking to address the Wii’s issues with the Wii U-- The GamePad represents further innovation and a reaction to industry trends-- The Wii U marks an attempt to recapture the hardcore market-- Nintendo is hoping to broaden the Wii U’s appeal through online and multimedia capabilities

- The Wii U faces some potential problems-- The retention of the Wii brand is a double-edged sword-- The pricing of the console marks a key turning point in Nintendo’s strategy-- The competition is moving quickly this time around

CONCLUSIONS

- Nintendo’s innovation has been a success in the home console market, although challenges are still to come

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